Letshego Holdings Limited, the Botswana domiciled micro financier, said this week it is in the process of acquiring a stake in the issued share capital of Micro Africa Limited (MAL), a private company incorporated in Kenya.
The move, which is subject to all necessary formalities, would see the BSE quoted micro lender owning 62.52 percent of the company’s issued capital as it moves to cement its presence across the continent.
“MAL’s management team has successfully introduced products involving the perfecting of security, over the counter cash handling for loan transactions and mobile banking technology,” Letshego said in a circular to shareholders this week.
Letshego said the purchase price is USD3.3 million (about P24.7 million) and it will be financed through the group’s existing resources.
MAL’s net assets were USD4.1 million (about P30.7 million) at 30 June 2011 and profit after tax was USD331, 000 (about P2.5 million) for the year ended 31 December 2010.
The effective date of the acquisition is expected to be 31 October 201, but this is subject to all necessary formalities being concluded.
“MAL is not expected to contribute significantly to the Group’s financial results for the year ending 31 January 2012, but is a welcome addition to the Letshego Group and is expected to contribute to the Group profitability, geographical diversification of earnings, product offering and technology skills set over time,” the company said.
The Kenyan outfit was founded in 2000 and provides financial services to micro-entrepreneurs and low income individuals throughout Eastern and Central Africa.
It currently has operations through subsidiaries in Rwanda, South Sudan and Uganda and an associated company in Tanzania.
The move by Letshego will cheer the panicky local shareholders of Letshego Botswana, who were shocked by Botswana government’s decision to cease facilitating the deduction of consumer lenders’ loan repayments through the Central Register effective from 1 December 2011.
The move was feared will trigger collection problems, which led to sell off last Friday on the Botswana Stock Exchange (BSE) as investors rushed for the exit.
However, Letshego Botswana said it will look at alternative premium collection methods in a bid to keep the company running.
“We understand that the facility to request the repayments from the Government payroll will be discontinued with effect from 1 December 2011. Letshego and other consumer lenders have agreements in place with the respective Central Registers which will therefore be terminated on that date.”
The company said if it is no longer able to collect the normal monthly loan repayments via its agreement with the Central Register then Letshego can collect loan repayments via electronic debit orders.
All customers of Letshego Botswana have already signed mandate forms as part of the normal loan agreements.
Meanwhile, Letshego said it expects profit before tax for the six month period ended 31 July 2011 to be in the region of 15 percent higher than the prior financial period to 31 July 2010.
After tax earnings are expected to be at least 35 percent higher than the prior period due to the use of accumulated tax reserves by the once off scrip dividend that was approved by Shareholders on 12 April 2011.
Letshego Holdings Limited, which is listed on the BSE, is a leading provider of unsecured consumer loans, has operations in Botswana, Mozambique, Namibia, Swaziland, Tanzania, Uganda and Zambia.